Earnings Predictions for the Week Ahead

Benefit
From a Deluge of Reports

by Ian Harvey

July 24, 2017

The main focus in the week ahead will be
earnings reports, with more than 800 companies coming out with quarterly
results, including 183 S&P 500 members and 13 Dow stocks. FANG names— Facebook,
Amazon and Alphabet — are among the S&P companies reporting, as are Exxon
Mobil, Caterpillar, United Technologies, McDonald's, and Boeing.

The earnings season was expected to be
strong, and up until last Friday, July 21, there were results from 97 S&P
500 members already out, which have provided a positive and reassuring view of
corporate earnings; this is expected to continue with further strengthening through
the remainder of this earnings season.

There have been plenty of positives so
far from the early start of the earnings season, and members of Stock Options
Made Easy have been benefiting from this situation; here are some of these
positive aspects:-

1.
Plenty of positive surprises;
particularly on the earnings front.

2.
Earnings and revenue growth
pre-season expectations have been exceeded.

3.
Most sectors are participating
in the growth – not limited to one or two sectors.

4.
Negative estimate revisions are
similar to other comparable periods.

This improvement in quarterly performance
has been influenced by an economic improvement, jobs growth and oil prices
starting to rise.

Alphabet Inc (NASDAQ:GOOGL) -- Pricing remains under pressure, both on account of the ongoing
FX concerns as well as continued strength in mobile and TrueView. Google’s
cloud business trails Amazon’s AWS, Microsoft’s Azure and IBM. Google’s troubles
in the EU are mounting.

McDonald's Corporation (NYSE:MCD) – There is plenty of optimism about McDonald's earnings report. The
stock has risen more than 20% so far this year to make the fast food titan one
of the best-performing members of the Dow.

Caterpillar Inc. (NYSE:CAT) -- Analysts see earnings growth of 31.4% on average for the next
five years, and 15.6% year over year for the most recent quarter. The market
expects a strong beat, with a whisper number of $1.32 versus the consensus
$1.26.

Canadian National Railway (USA) (NYSE:CNI) -- expected to perform well in the second quarter, driven by an
improvement in the coal-related scenario which should aid overall volume; likely
to beat estimates this quarter.

Chipotle Mexican Grill, Inc. (NYSE:CMG) -- Costs to be up approximately 20 to 30 basis points versus the
first quarter of 2017; impacting on investors' confidence; Chipotle had to
temporarily close one of its Virginia locations following reports, which were
later confirmed, of a norovirus outbreak; and John Staszak at Argus downgraded
the stock from "buy" to "hold" on Friday morning.

Facebook Inc (NASDAQ:FB)-- one of the top performing stocks in the market in recent years,
and with the stock up 41% in 2017 alone, investor optimism is running high. The
company has been growing earnings at a rapid pace, and analysts see earnings
growth of 16.5% year over year for its most recent quarter. Facebook has a
strong history of topping estimates.

Gilead Sciences, Inc. (NASDAQ:GILD) – Missed first quarter earnings; but likely to beat this time
round; but estimates suggest HIV and other pipeline growth will not be
sufficient to offset the margin and revenue erosion caused by the competitive
and declining HCV market; particularly without any acquisitions and based on
projected decline in revenue, margin, and earnings going forward for the
foreseeable future.

Amazon.com, Inc. (NASDAQ:AMZN) -- has continued to increase its focus on a platform approach, and
on top of its e-commerce dominance, the company is rapidly expanding its media
and cloud services operations; beat its earnings projections last quarter by
43.69%, which should provide investors with a sense of optimism.

AbbVie Inc (NYSE:ABBV)
--Although Humira is doing well, the company is concerned about the product’s
long-term prospects owing to the potential biosimilar competition; also a Humira
patent litigation a concern. Viekira faces intense pricing and competitive pressure
in the HCV market; and the weak performance continues this year with sales
expected to decline to $1 billion in 2017.

U.S. oil prices have floundered in recent
weeks. By June 21, crude had cratered more than 20% from its February highs and
officially plunged into bear territory; down 14.3% for the first half of the
year - the worst performance since 1998. ExxonMobil Corp. and Chevron Corp. -
the DJIA's two energy giants - were among the 7 Dow stocks that closed the
first half with a loss. Both companies experienced sharp declines in price this
year, dropping more than 10% year to date when the index (with a rise of 8%)
marked its best first-half performance since 2013.

The spectacular boom in U.S. shale
production has played havoc with oil prices. Arguably, the biggest development
in global oil markets over the last few years, the relentless increase in North
American shale output has undermined efforts by OPEC and other major producers'
efforts to 'rebalance' the market and prop up prices.

You will notice that most options trades to
consider have short-term expiry dates, as the expected movement of the option’s
price should occur just prior to, or shortly after, report of earnings. It is
entirely up to the individual trader as to whether they add a stop-loss or not.

Also Note: These suggestions for options
trade considerations require investors/traders to use their own discretion as
to when to enter or exit! As well, it is advisable to do further research and
due diligence before executing your trade.

If you wish to receive more options trading
recommendations similar to this, which will help boost your portfolio strategy,
get on board with the members of Stock Options Made Easy.